In Depth

California district court holds that dismissal of copyright action for lack of statutory standing did not divest the court of jurisdiction to award attorneys’ fees to prevailing party, but denies motion for fees, finding that plaintiff’s arguments were not objectively unreasonable and that fee award would not further purposes of Copyright Act.

After obtaining summary judgment on plaintiff Minden Pictures, Inc.’s copyright claim on the ground that Minden lacked standing under the Copyright Act, defendant John Wiley & Sons, Inc. brought a motion for attorneys’ fees and costs under Section 505 of the Copyright Act. Minden opposed the motion, arguing that the court’s grant of summary judgment on standing grounds signified that the court lacked subject matter jurisdiction over the action and that it therefore had no power to award fees. Even if the court had the authority to grant fees, Minden argued, Wiley’s fee motion should be denied because Minden’s arguments were objectively reasonable.

Before reaching the merits of Wiley’s motion, the court addressed Minden’s jurisdictional argument. In support of its argument, Minden cited a line of Ninth Circuit cases holding that when a district court lacks jurisdiction under Article III, it also lacks power to award fees under a fee-shifting statute. The court noted that the common thread in those cases was that the fee-shifting statute involved did not provide an independent grant of subject-matter jurisdiction. Thus, the critical question was whether the court’s dismissal for lack of Copyright Act standing represented a dismissal for lack of subject matter jurisdiction.

Minden argued that the Ninth Circuit’s decision in Righthaven LLC v. Hoehn, 716 F.3d 1166 (9th Cir. 2013) squarely held that standing under the Copyright Act is a jurisdictional question. While acknowledging that Righthaven’s language implicitly suggested that standing under the Copyright Act is jurisdictional, the district court found such a reading to be problematic. First, by conflating the principles of Article III standing and statutory standing, Righthaven was in tension with a long line of Ninth Circuit cases that recognized situations where a plaintiff has suffered an “injury in fact” and yet has not suffered a legally cognizable injury under the applicable statutory scheme. Those situations are properly disposed of by way of a Rule 12(b)(6) motion to dismiss for failure to state a claim, not dismissal for lack of subject matter jurisdiction. Applying this distinction, in HyperQuest, Inc. v. N’Site Solutions, Inc., 632 F.3d 377 (7th Cir. 2011), the Seventh Circuit expressly found that standing under the Copyright Act is not jurisdictional and affirmed an award of attorneys’ fees under Section 505 even though the plaintiff lacked standing under the Copyright Act. The court, drawing on HyperQuest, explained that the instant case demonstrated the distinction between Article III and statutory standing. Minden had undeniably suffered an “injury in fact” for purposes of Article III standing, if, as alleged, Wiley exceeded the scope of the license granted by Minden on behalf of the photographers. However, notwithstanding that alleged harm, the standing requirements under the Copyright Act did not permit Minden to bring suit.

The court also found that Minden’s reading of Righthaven was in conflict with prior Ninth Circuit decisions that had affirmed awards of attorneys’ fees even though the plaintiff was found to lack standing under the Copyright Act. Furthermore, during the pendency of Wiley’s motion, the Supreme Court issued a decision in Lexmark International, Inc. v. Static Control Components, Inc., -- S. Ct. --, 2014 WL1168967 (Mar. 25, 2014), recognizing that it was “misleading” to characterize statutory standing as jurisdictional. The court reasoned that Lexmark is incompatible with Wiley’s reading of Righthaven as holding that Copyright Act standing is the equivalent of jurisdictional standing. Accordingly, the court concluded that it had jurisdiction to address the merits of Wiley’s fees motion.

Turning to the merits, the court found that the degree of Wiley’s success was limited given that there had been no substantive ruling as to infringement and Wiley remained subject to suit by each of the individual photographers on whose behalf Minden sought to assert claims. Second, the court found that Minden’s arguments and legal positions in the case were not objectively unreasonable, given Minden’s long-standing relationship and agreements with the photographers. Finally, the court found that awarding fees in this case would not further the purposes of the Copyright Act, rejecting the notion that Minden was a “copyright troll.” Rather, the agency agreements showed Minden to be a legitimate third-party licensing agent with long-standing ties to major photographers. Minden’s business model was not contrary to the purposes of the Copyright Act, because there is value in facilitating the efficient licensing of legitimate copyright holders. For these reasons, the court denied Wiley’s motion for attorneys’ fees.

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